Due to increasing demand from self-directed investors as well as financial advisors, Folio says it has plans to expand its platform's socially responsible investing (SRI) capabilities.
It most recently added a filter for companies with proven records of animal abuse and is the only brokerage service-provider to partner with The Humane Society of the United States (HSUS) to create such an investment screen.
Greg Vigrass, president of Folio Institutional, the company's custody unit, says that this latest addition to the platform was born out of a conversation with financial advisors, who were complaining about not being able to easily keep track of companies with animal abuse ties. Folio will partner with more third-party evaluators to create additional SRI screens as investors call for them.
“We believe that [SRI] is an increasingly important area of the market,” he added. “Doing well and doing good isn’t a choice anymore.”
When Folio launched in 1999, offering money managers a tool for avoiding stocks in certain industries was commonplace. It helped investors maintain diversified portfolios.
That same technology has since been applied to socially conscious investing. Instead of simply using industry classification codes to power filters, Folio is now incorporating information from third-party evaluators, like HSUS’s list of companies participating in animal abuse.
“These aren’t necessarily companies that fall into a classification,” said Vigrass. “It involves a judgment-based decision by a third-party.”
Through the platform, self-directed investors and advisors can select issues or industries they or their clients might want to avoid, such as companies involved with nuclear power or ties to genocide, and push individual stocks or entire portfolios through pre-selected, values-based screens.
For advisors with model portfolios, these screens can be applied to the settings of an individual client account, automatically factoring out stocks and eliminating the need to manually adjust a model portfolio or construct something totally new.
Late in 2016, FOLIOfn, the parent company of Folio Investing and Folio Institutional, acquired the SRI-focused First Affirmative Financial Nework, an RIA with over $1 billion in AUM. Vigrass says Folio has been tapping the expertise of this advisor network to ratchet up its platform’s SRI functions.
As the needs of self-directed investors change and advisors make more recommendations, Folio plans to add more exclusionary filters.
Vigrass added, “We can easily create and manage these.”